AGREEMENT
THIS AGREEMENT, made as of the 30th day of October, 1997, between
GP Development Corporation, a Maryland corporation having an office c/o
Xxxxx X. Xxxxxxxxx & Associates, Inc., 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000 ("GP") and Kranzco Realty Trust, a Maryland real estate
investment trust having an office at 000 Xxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 ("KRT").
W I T N E S S E T H:
WHEREAS, ELG Financial Corporation ("ELG") entered into five
purchase and sale agreements with the sellers described therein (each, a
"Seller", and collectively, the "Sellers") with respect to the properties
described therein, as more particularly described in Exhibit A annexed
hereto (the "Contracts");
WHEREAS, by assignment dated as of the 9th day of October, 1997,
ELG assigned all of its right, title and interest in and to the Contracts
to GP; and
WHEREAS, GP desires to merge with a wholly owned subsidiary of
KRT designated by KRT ("KRT Sub") and KRT desires to allow GP to do so.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration,
the adequacy and receipt of which are hereby acknowledged by all the
parties, it is agreed as follows:
4. All initially capitalized terms used herein which are not
otherwise defined herein shall have the meanings set forth in the
Contracts. As used herein, "Properties" shall mean the five properties
each of which is referred to as a Property under the Contract relating
thereto.
5. Simultaneously with the Closing contemplated by the
Contracts, GP shall merge into KRT Sub pursuant to a merger agreement
effectuating the terms of this Agreement in a form to be agreed upon by GP
and KRT on or before 5:00 P.M. (E.S.T.) on October 31, 1997 (the "Merger
Agreement"), and KRT Sub, at its sole cost and expense and without cost to
GP, shall cause GP to perform its obligations under the Contracts.
6. Simultaneously herewith, KRT has deposited in escrow with
Xxxxxx and Xxxxxx Professional Association ("Escrow Agent") (i) the sum of
Twenty-Five Thousand and no/100 ($25,000.00) Dollars, representing the five
Initial Escrow Deposits made by ELG under the Contracts (the "Deposit") and
(ii) the sum of Twenty-Five Thousand and no/100 Dollars ($25,000),
representing the deposit made by GP to obtain an extension of the
Inspection Period under the Contracts to November 15, 1997 pursuant to that
certain letter agreement dated October 28, 1997 between GP and Parkway
Partners, L.L.C. (the "Extension Deposit"). The Deposit and the Extension
Deposit shall be held in escrow by Escrow Agent in accordance with the
provisions of Section 17 hereof. In the event KRT does not notify GP on or
before 5:00 P.M. (E.S.T.) on November 6, 1997 that KRT has elected to
terminate this Agreement in accordance with its rights set forth in Section
8 hereof, GP shall deliver the Additional Escrow Deposits to the Title
Company and KRT shall deposit in escrow with the Escrow Agent, on or before
5:00 P.M. (E.S.T.) on November 6, 1997, the sum of Two Hundred Twenty-Five
Thousand and no/100 ($225,000.00) Dollars in cash or other immediately
available funds, representing the sum of the Additional Escrow Deposits
(the "Additional Deposit"), provided that, if Sellers and GP modify the
Contracts such that the Extension Deposit is credited against the
Additional Escrow Deposits, the amount of the Additional Deposit payable by
KRT hereunder shall be reduced by $25,000. The Additional Deposit shall be
held in escrow by Escrow Agent in accordance with the provisions of Section
17 hereof.
7. Simultaneously with the Closing, KRT shall pay the
shareholders of GP, in consideration for the merger of GP into KRT Sub, the
sum of Two Million and no/100 ($2,000,000.00) Dollars (the
"Consideration"), as follows: (a) Four Hundred Thousand and no/100
($400,000.00) Dollars in immediately available federal funds wire
transferred to such account as GP may designate in writing not less than
one business day before the Closing, and (b) One Million Six Hundred
Thousand and no/100 ($1,600,000.00) Dollars by issuing to GP's shareholders
common shares of beneficial interest in KRT (the "Stock"). The number of
shares of Stock issued to GP or its designees shall be determined by
dividing $1,600,000 (or such other amount as shall be designated by GP in
accordance with the terms of this Section 4) by the closing price of such
stock on the New York Stock Exchange on the business day immediately
preceding the Closing, and rounding the quotient to the nearest whole
number. Such Stock shall have the restrictions on transfer for a period of
one (1) year and the registration rights set forth in the Merger Agreement.
Notwithstanding the foregoing, KRT shall increase the portion of the
Consideration payable in shares of Stock and reduce the portion of the
Consideration payable in cash in such proportion as GP shall elect in its
sole and absolute discretion upon written notice to KRT not less than three
(3) days prior to Closing. In the event the Closing occurs but any one or
more of the shopping centers included within the definition of Assemblage
are not included in the sale by reason of the failure of a condition or
conditions precedent set forth in the applicable Contract or the applicable
Seller's default thereunder, the Consideration shall be reduced by an
amount equal to $400,000 for each Property not included in the sale, in
which event the portions of the Consideration payable in cash and in shares
of Stock shall be reduced proportionately. GP hereby covenants that, in
the event any of the Property Inspection Reports (as hereinafter defined)
disclose material environmental, structural, title or survey defects in
respect of any Property, and KRT does not have the right to, or does not
exercise any right it may have to, terminate this Agreement in accordance
with the terms of Section 8 hereof, GP shall negotiate in good faith with
the applicable Seller to obtain a reduction of the Purchase Price in an
amount necessary to cure such defects. If for any reason GP enters into a
modification or amendment to any Contract reducing the Purchase Price
payable for the Property to be conveyed thereunder, the Consideration shall
be increased by an amount equal to one-half (1/2) of such reduction, in
which event the portions of the Consideration payable in cash and in shares
of Stock shall be increased accordingly.
8. GP represents and warrants to KRT as follows:
(a) The Contracts are in full force and effect, have not been amended
except as set forth on Exhibit A, and the Initial Escrow Deposits have been
deposited with the Escrow Agent under the Contracts;
(b) with the exception of the assignment from ELG to GP, neither the
Contracts nor any interest in the Initial Escrow Deposits have previously
been assigned;
(c) GP has the full power and authority to make, deliver and perform
this Agreement without the prior consent of any person, entity or
governmental authority. This Agreement is valid, binding and enforceable
against GP in accordance with its terms;
(d) (i) to the best of GP's knowledge, GP is not in default of any
term, provision or obligation to be performed by it under any of the
Contracts, and (ii) to the best of GP's actual knowledge, the Sellers
thereunder are not in default of any term, provision or obligation to be
performed by them under any of the Contracts;
(e) GP has no actual knowledge of any state of facts which would now
or, with the passage of time, cause any of the representations made by the
Sellers under any of the Contracts to be untrue;
(f) true and complete copies of the Contracts have been delivered by
GP to KRT; and
(g) GP owns no assets other than (x) the purchaser's rights under the
Contracts, and to the Initial Escrow Deposits and the Extension Deposit
held under the Contracts and (y) cash in bank accounts. GP has no
liabilities other than the purchaser's obligations under the Contracts,
payment obligations with respect to the Property Inspection Reports and
legal fees incurred in connection with this Agreement, the Merger Agreement
and the Contracts (which legal fees shall not be payable by KRT or KRT Sub
by reason of the merger contemplated by the Merger Agreement).
9. GP and KRT represent and warrant that no broker had any part
in bringing about this transaction other than New America Network, Inc. and
Xxxxx Xxxxxx Inc. (collectively, the "Brokers"). GP agrees to indemnify
and hold harmless KRT from and against any and all liabilities,
obligations, costs and expenses in connection with any claim for
commission, compensation or otherwise for the bringing about of this
transaction or the consummation thereof which may be made against KRT by
any person or firm as a result of a breach of the foregoing representation
made by GP. KRT agrees to indemnify and hold harmless GP from and against
any and all liabilities, obligations, costs and expenses in connection with
any claim for commission, compensation or otherwise for the bringing about
of this transaction or the consummation thereof which may be made against
GP by any person or firm as a result of a breach of the foregoing
representation made by KRT. KRT shall pay any commissions or other fees
payable to the Brokers at the Closing, provided, however, that such
commissions or other fees shall not exceed $100,000 for New America
Network, Inc. and $50,000 for Xxxxx Xxxxxx Inc. The obligations set forth
in this Section 6 shall survive the Closing.
10. GP has ordered certain reports and studies in connection
with the inspection of the Properties by GP and KRT, as more particularly
described in Exhibit B annexed hereto (the "Property Inspection Reports").
The anticipated costs of the Property Inspection Reports and the
anticipated date of delivery of said Property Inspection Reports are set
forth on Exhibit B. At all times prior to the Closing or upon the
termination of this Agreement by reason of GP's default hereunder, GP shall
pay the costs of the Property Inspection Reports as and when the same
become due and payable. Upon the Closing or the termination of this
Agreement for any reason other than GP's default hereunder, KRT shall
reimburse GP for all costs theretofore expended by GP in respect of the
Property Inspection Reports. To secure KRT's obligations under this
Section 7, KRT has simultaneously with the execution and delivery of this
Agreement delivered to Escrow Agent the sum of $50,000 (the "Reports
Deposit"), to be held in escrow in accordance with the terms of this
Agreement. Escrow Agent shall at the Closing disburse (x) to GP a portion
of the Reports Deposit equal to all amounts theretofore expended by GP in
connection with the Property Inspection Reports and (y) the balance of the
Reports Deposit, if any, to KRT. Upon the termination of this Agreement
for any reason other than GP's default hereunder, Escrow Agent shall
disburse (x) to GP an amount equal to all amounts theretofore expended by
GP in connection with the Property Inspection Reports and (y) the balance,
if any, to KRT, unless GP shall have instructed Escrow Agent in writing
within five (5) days of the termination of this Agreement to retain all or
any portion of such balance to defray the cost of any Property Inspection
Reports not theretofore paid by GP. In the event Escrow Agent retains all
or any portion of such balance in accordance with the terms of the
preceding sentence, Escrow Agent shall from time to time disburse from the
Reports Deposit such amounts as GP shall specify upon GP's submission to
Escrow Agent of evidence reasonably satisfactory to Escrow Agent that the
costs of Property Inspection Reports not theretofore paid by GP have become
due and payable. On the date which is three (3) months after the date of
the termination of this Agreement for any reason other than GP's default
hereunder, Escrow Agent shall disburse the balance of the Reports Deposit,
if any, to KRT, and Escrow Agent shall have no further obligation to KRT or
GP under this Section 7. In the event of the exhaustion of the Reports
Deposit (or the disbursement of the balance thereof to KRT in accordance
with the terms of the preceding sentence) following the termination of this
Agreement for any reason other than GP's default hereunder, KRT, promptly
following GP's written demand therefor, shall remit to GP all amounts
payable in respect of the Property Inspection Reports and not theretofore
paid by GP or disbursed to GP by Escrow Agent. In the event of the
termination of this Agreement by reason of GP's default hereunder, KRT
shall have no obligation with respect to the costs of the Property
Inspection Reports and Escrow Agent shall promptly remit to KRT the Reports
Deposit. Notwithstanding the foregoing, in the event that Escrow Agent
releases all or any portion of the Reports Escrow to GP following the
termination of this Agreement by KRT pursuant to the exercise of its rights
under Section 8 hereof, and GP subsequently either proceeds to Closing
under the Contracts or effectuates a transaction in the nature of an
assignment of the Contracts, GP shall promptly remit to KRT an amount equal
to all amounts theretofore released to GP by Escrow Agent from the Reports
Escrow and Escrow Agent shall release to KRT the balance, if any, of the
Reports Escrow. The terms of this Section 7 shall survive the Closing or
any earlier termination of this Agreement.
11. Under the Contracts, GP has an Inspection Period ending on
November 15, 1997 to complete its inspections of the Properties. GP shall
have no right to terminate the Contracts unless KRT has terminated this
Agreement. KRT shall have a limited inspection period under this Agreement
to complete its inspections of the Properties, which inspections shall be
limited to KRT's review of the Property Inspection Reports and the
insurance coverages (the "Insurance Coverages") maintained by the Seller
with respect to The Village at Mableton Shopping Center (the "Mableton
Property"), and for no other purpose. In the event KRT shall notify GP on
or before 5:00 P.M. (E.S.T.) on November 6, 1997 that KRT was unsatisfied
with such Property Inspection Reports or the Insurance Coverages, this
Agreement shall terminate and be of no further force or effect, and Escrow
Agent shall deliver the Deposit to KRT. Notwithstanding anything to the
contrary contained herein, KRT shall have no right to send such notice or
to terminate this Agreement if the aggregate cost to cure any
environmental, engineering, title and/or survey defects (excluding any
defects caused by the Mableton Casualty (hereinafter defined)) disclosed by
the Property Inspection Reports does not exceed Four Hundred Ten Thousand
and no/100 ($410,000.00) Dollars and KRT's review of the Insurance
Coverages indicates that such coverages (A) are in full force and effect
and (B) are sufficient to (i) pay the cost of repairing the damage caused
by the Mableton Casualty, to the extent that the tenant under the K-Mart
lease is not obligated to repair the same and notwithstanding that a
portion of an insurance claim may not be payable by the insurer by reason
of a deductible clause in the applicable Seller's casualty insurance policy
and (ii) compensate the owner of the Mableton Property for losses generally
covered by business income coverage caused by the Mableton Casualty for a
period of up to two (2) years, if applicable, from the date of the Mableton
Casualty. If the aggregate cost to cure such defects exceeds $410,000
(excluding any defects caused by the Mableton Casualty) or KRT's review of
the Insurance Coverages indicates that such coverages (1) are not in full
force and effect or (2) are insufficient to (x) pay the cost of repairing
the damage caused by the Mableton Casualty, to the extent that the tenant
under the K-Mart lease is not obligated to repair the same and
notwithstanding that a portion of an insurance claim may not be payable by
the insurer by reason of a deductible clause in the applicable Seller's
policy of title insurance or (y) compensate the owner of the Mableton
Property for losses generally covered by business income coverage caused by
the Mableton Casualty for a period of up to two (2) years, if applicable,
from the date of the Mableton Casualty, and KRT elects to terminate this
Agreement, GP may elect to terminate the Contracts. For purposes of this
Paragraph 8, the "Mableton Casualty" shall mean the casualty occurring at
the Mableton Property on October 26, 1997. KRT and GP hereby acknowledge
and agree that the following standards shall apply in assessing and
quantifying the aggregate cost to cure any environmental, structural, title
or survey defects disclosed by the Property Inspection Reports:
a. Any matter disclosed in the PCS Report (as defined in
Exhibit B) must require repair within two years of the date
of the PCS Report;
b. With respect to any matter disclosed in the Phase I Report
(as defined in Exhibit B), such matter shall qualify as a
defect (x) if the same constitutes a violation of applicable
law or laws or (y) if the same would result in a violation
of applicable law or laws upon the development,
redevelopment or improvement of the applicable Property (or
any portion thereof).
c. In the case of any matter disclosed in any title report for
any Property, to qualify as a defect, (x) the Title Company
shall not be willing to omit or insure against (without
additional premium) such matter as an exception from
coverage in the policy of title insurance issued in respect
of the Property at Closing, and (y) such matter shall not
constitute an easement, covenant, restriction or other
encumbrance which is not violated by the present use of the
Property and would not, upon any future violation, cause a
forfeiture or reversion of title; provided, however, that if
the Title Company shall be willing to insure against any
such matter with an additional premium the amount of such
additional premium may be included by KRT in determining
whether the $410,000 threshold has been met; and
d. In the case of any matter disclosed by a survey of any
Property, to qualify as a defect, (x) the Title Company
shall not be willing to insure without additional premium
against monetary loss sustained by reason of the enforced
removal of any improvements located on such Property by
reason of such matter and (y) such defect shall affect the
marketability of title to the Property; provided, however,
that if the Title Company shall be willing to insure against
any such matter with an additional premium the amount of
such additional premium may be included by KRT in
determining whether the $410,000 threshold has been met;
12. During the Inspection Period, and, if KRT has not terminated
this Agreement in accordance with the provisions of Section 8 hereof and is
otherwise not in material default of any of its obligations hereunder,
after the Inspection Period and until the Closing, (a) GP shall continue to
take the leading role in communicating with the Sellers and any other third
parties (including, without limitation, tenants and mortgagees of the
Properties, environmental and engineering firms, title companies and
surveyors) in connection with the transactions contemplated hereby;
provided, however, that the foregoing is not intended to prevent KRT from
communicating with such parties with the active, present participation of a
representative of GP; and (b) GP shall not grant any consents or otherwise
make any decisions binding on the purchaser under the Contracts (including,
without limitation, notifying the Seller under the Contract relating to
Park Plaza as to whether to prepay the loan thereon, approving the proposed
partnership agreements with the partners of the Sellers in connection with
the Contracts relating to Park Plaza and North Park, and deciding whether
to acquire any of the Properties subject to the existing debt) without the
prior written consent of KRT, which consent shall not be unreasonably
withheld, conditioned or delayed. GP shall promptly send to KRT copies (by
telecopy and/or by overnight courier if telecopy is impracticable) of any
notices received by GP under the Contracts. If KRT does not notify GP on
or before 5:00 P.M. (E.S.T.) on November 6, 1997 that KRT has elected to
terminate this Agreement in accordance with its rights set forth in Section
8 hereof, then, promptly following such date, KRT shall be introduced to
the Sellers, tenants and mortgagees as a prospective investor in the
Properties, the manner of such introductions to be determined by GP in its
sole discretion. In the event the Sellers default under the Contracts, GP
agrees to cooperate with KRT and to exercise such remedies under the
Contracts as KRT may elect, including, without limitation, seeking specific
performance or obtaining a refund of the Initial Escrow Deposit and the
Additional Escrow Deposit from the Title Company. GP further agrees to
cooperate with KRT to facilitate KRT's communication with the Sellers and
with third parties in connection with the transactions contemplated hereby,
such cooperation to include, without limitation, making representatives of
GP available at reasonable times and upon reasonable notice to participate
in such communications and meetings. KRT acknowledges, affirms,
represents, warrants and covenants on behalf of itself and its officers,
directors, employees, agents, successors and assigns, that it shall not
make any contact whatsoever, direct or indirect, with any of the Sellers
except as set forth in this Agreement.
13. Notwithstanding the provisions of Section 9 hereof, KRT
acknowledges that West Stewarts Mill Associates, L.P., as the Seller under
the Contract in respect of the Park Plaza Shopping Center (the "Park Plaza
Seller"), has applied for a loan (the "New Park Plaza Loan") on the terms
set forth in that certain letter dated October 21, 1997 from Xxxxxx
Guaranty Trust Company of New York to Parkway Partners LLC, as modified by
the terms reflected in that certain letter agreement dated October 28, 1997
between GP and Parkway Partners, L.L.C. Provided that KRT has not
exercised its right to terminate this Agreement in accordance with the
terms of Section 8 hereof, KRT shall consent to the New Park Plaza Loan.
14. (a) In the event that KRT (x) elects not to terminate this
Agreement during the Inspection Period in accordance with the provisions of
Section 8 hereof or (y) terminates this Agreement in violation of the terms
of Section 8 hereof, KRT agrees that GP's damages in the event KRT defaults
in its obligations hereunder (other than by reason of the failure of the
Sellers or GP to perform their obligations under the Contracts or GP's
failure to perform its obligations under this Agreement or the failure of a
condition precedent under the Contracts or this Agreement) shall be
impracticable and difficult to ascertain. KRT and GP have considered
carefully the loss as a consequence of the negotiation and execution of
this Agreement, and the expenses of GP incurred in connection with GP's
performance hereunder, and the other damages, general and special, that GP
and KRT realize and recognize GP would sustain, but that cannot be
calculated with reasonable certainty. Based on all those considerations,
in the event of a default by KRT with respect to its obligations hereunder,
GP shall be entitled to the Deposit and the Additional Deposit, and KRT
shall owe GP Five Hundred Thousand and no/100 ($500,000.00) Dollars as
liquidated damages in full settlement of all claims resulting from such
default by KRT, GP hereby specifically waiving and relinquishing any and
all other remedies at law or in equity; provided, however, that the
foregoing liquidated damages shall not apply to any duty, obligation,
liability or responsibility which GP may have to any Seller under Paragraph
5.A of any Contract by reason of any action of KRT or any obligation which
KRT may have to GP pursuant to Section 6 hereof. To secure the payment of
the foregoing obligation, KRT has simultaneously herewith delivered its
promissory note in the amount of $500,000 (the "KRT Note") to Escrow Agent
to be held in escrow in accordance with the provisions of Section 17
hereof.
(b) GP agrees that KRT's damages in the event GP defaults in its
obligations hereunder (other than by reason of the failure of the Sellers
to perform their obligations under the Contracts or KRT's failure to
perform its obligations under this Agreement or the failure of a condition
precedent under the Contracts or this Agreement) shall be impracticable and
difficult to ascertain. KRT and GP have considered carefully the loss as a
consequence of the negotiation and execution of this Agreement, and the
expenses of KRT incurred in connection with KRT's performance hereunder,
and the other damages, general and special, that GP and KRT realize and
recognize KRT would sustain, but that cannot be calculated with reasonable
certainty. Based on all those considerations, in the event of a default by
GP with respect to its obligations hereunder, KRT shall have the right to
either (x) seek specific performance of GP's obligations hereunder or (y)
terminate this Agreement, whereupon KRT shall receive a refund of the
Deposit and the Additional Deposit and GP shall owe KRT Five Hundred
Thousand and no/100 ($500,000.00) Dollars as liquidated damages in full
settlement of all claims resulting from such default by GP, KRT hereby
specifically waiving and relinquishing any and all other remedies at law or
in equity; provided, however, that the foregoing liquidated damages shall
not apply to any duty, obligation, liability or responsibility which GP may
have to KRT pursuant to Section 6 hereof. To secure the payment of the
foregoing obligation, GP has simultaneously herewith delivered its
promissory note (the "GP Note") to Escrow Agent to be held in escrow in
accordance with the provisions of Section 17 hereof. GP acknowledges and
affirms that if GP defaults under this Agreement, and subsequently either
assigns directly or indirectly its rights under the Contracts to any other
person or entity in exchange for cash or any other form of consideration,
KRT, for the purpose of satisfying a judgment obtained by KRT under the GP
Note, shall have recourse to (i) any proceeds specifically received by GP
as a result of such subsequent assignment or assignments and (ii) actual
distributions of such proceeds made by GP. Any recipients of any such
distributions from GP, which distributions are directly traceable to such
assignment or assignments, shall be personally liable for the sole purpose
of refunding to GP, or to KRT as judgment creditor of GP, the distribution
actually received by such person which is directly traceable to such
subsequent assignment or assignments. KRT acknowledges and affirms that
the recipients of any such distributions would be the shareholders of GP
and that such persons' liability is limited to the repayment of such
proceeds actually received by such persons. Xxxxx X. Xxxxxxxxx, Xxxx X.
Xxxxxx, Xxxxxxx X. Mittental and Xxxx Xxxxx, as the primary shareholders of
GP, hereby join in the making of this Agreement for the sole purpose of
acknowledging their agreement to be personally bound, as a potential
recipient of proceeds from GP as aforesaid, to return any proceeds actually
received by them in violation of this Section 11(b). In no event shall the
aggregate amount required to be returned by such shareholders exceed
$500,000.
15. Notwithstanding anything contained herein or in the
Contracts to the contrary, the parties acknowledge and agree that they
shall exercise commercially reasonable efforts and proceed with good faith
and due diligence to close the transactions contemplated hereby and by the
Merger Agreement contemporaneously with the Closing of the transactions
contemplated by the Contracts and within the time periods required by the
Contracts and as soon as reasonably possible, with a goal of closing the
same on or about November 10, 1997. In furtherance thereof, the parties
hereto agree to cooperate with one another to effectuate the closing of the
aforesaid transactions, such cooperation to include, without limitation,
(x) the preparation and submission of such documentation as shall be
required to secure the consent of any lender under a mortgage loan
encumbering any Property to the conveyance of such Property to GP and to
GP's assumption of the mortgage indebtedness secured thereby, to the extent
the purchaser under the Contract shall be obligated to seek such consent or
GP shall, in accordance with Section 9 hereof, elect to acquire title to
such Property subject to such mortgage indebtedness and (y) the undertaking
of negotiations with the partners of the Park Plaza Seller and the partners
of the Seller under the Contract in respect of North Park Shopping Center
with regard to GP's admittance as a general partner of such Sellers (or the
delivery of KRT stock to such partners in lieu of such admittance), with a
goal of finalizing such partnership agreements (or agreement to deliver
stock) on or before October 31, 1997. KRT further agrees to cause GP to
proceed to the Closing of the transactions contemplated by the Contracts
upon the receipt of tenant estoppel certificates from (x) the anchor
tenants specified in the Contracts and (y) tenants under leases demising
not less than fifty (50%) of the balance of the rentable square feet at
each Property demised as of the date hereof, provided that Sellers shall
have complied with all material conditions to Closing set forth in the
Contracts and provided further that (x) each Seller shall execute and
deliver to GP at Closing a certificate in form reasonably acceptable to KRT
from such Seller as to the matters set forth in the form of tenant estoppel
certificate annexed to the Contracts for the tenants selected by such
Seller which did not execute and deliver a tenant estoppel certificate to
the extent required to increase to 80% the rentable square footage of the
premises demised under leases as of the date hereof at the applicable
Property (exclusive of the premises demised under the aforesaid anchor
leases as of the date hereof) for which a tenant estoppel certificate is
obtained and (y) any representations contained in any such certificate
delivered by a Seller shall survive for a period of not less than one (1)
year from the date of the Closing. In addition, KRT agrees that it shall
not direct GP to exercise any right to terminate the Contract in respect of
the Village at Mableton Shopping Center by reason of any right accorded to
the buyer thereunder by the risk of loss provisions thereof. KRT further
agrees that, upon the request of GP and subject to the agreement of the
Sellers, upon the Sellers' satisfaction of the conditions precedent to
Closing set forth in the Contracts in respect of not less than three (3) of
the Properties, KRT shall proceed to the Closing under the Contracts and
under the Merger Agreement with respect to such Properties, notwithstanding
Sellers' failure to satisfy the conditions precedent to Closing in respect
of the entire Assemblage. If KRT proceeds to Closing under the Contracts
and the Merger Agreement with respect to less than the entire Assemblage in
accordance with the terms of the preceding sentence, then the Consideration
payable at such Closing shall be reduced in accordance with the terms of
Section 4 hereof and (A) GP shall assign the Contracts with respect to
which KRT shall not proceed to Closing (the "Remaining Contracts") to a
single-purpose entity to be formed by GP ("Newco"), (B) GP and KRT shall
modify this Agreement and the Merger Agreement to the extent necessary to
reflect the intention of the parties thereto to proceed to Closing under
the Contracts with respect to less than the entire Assemblage and to
proceed to a subsequent closing under the Remaining Contracts and (C)
simultaneously with the Closing under the Remaining Contracts, Newco shall
merge into a wholly owned subsidiary of KRT pursuant to an agreement
between Newco and KRT substantially in the form of this Agreement and a
merger agreement between Newco and KRT substantially in the form of the
Merger Agreement, in each case with such modifications as shall be required
to reflect the intention of the parties thereto to proceed to Closing under
only the Remaining Contracts. Notwithstanding the foregoing, it shall be a
condition to KRT's obligation to close the transactions contemplated hereby
that GP shall have caused Xxxxxx Xxxxxxxx or such other nationally
recognized accounting firm reasonably acceptable to KRT to deliver to GP
not later than the Closing audited 1996 financial statements for each of
the Properties.
16. This Agreement contains the entire understanding of the
parties hereto and may not be modified or terminated except by a written
instrument signed by the party sought to be charged thereby. This
Agreement supersedes all prior agreements between the parties and/or their
affiliates with respect to the subject matter hereof, including, without
limitation, the September 23, 1997 letter agreement between Xxxxx X.
Xxxxxxxxx Commercial Corporation and KRT and the September 23, 1997 letter
from KRT to Xxxxx X. Xxxxxxxxx & Associates.
17. This Agreement is binding upon, and shall inure to the
benefit of, the parties hereto and their successors and assigns; provided,
however, that neither party may assign this Agreement without the prior
written consent of the other party, which consent may be withheld in the
sole discretion of the party being asked to give its consent.
18. All notices and communications hereunder shall be in writing
and shall be deemed to be duly given if delivered by telecopy (with a copy
sent by overnight courier) or by overnight courier, addressed as follows:
If to GP:
GP Development Corporation
c/o Xxxxx X. Xxxxxxxxx & Associates, Inc.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxx Xxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx and Xxxxxx Professional Association
00 Xxxxx Xxxxxxx Xxxxxx
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to KRT:
000 Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to Escrow Agent:
Xxxxxx and Xxxxxx Professional Association
00 Xxxxx Xxxxxxx Xxxxxx
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
All notices shall be deemed given on the date of receipt.
19. This Agreement shall be governed and construed in accordance
with the laws of the State of Maryland.
20. (a) Escrow Agent shall hold the Deposit, the Extension
Deposit, the Reports Deposit and, if applicable, the Additional Deposit in
one or more escrow accounts (collectively, the "Escrow Account") with a
recognized commercial bank or savings bank, of the type with which the
Escrow Agent usually and customarily maintains funds to be held in escrow.
The Escrow Account shall bear interest at the then prevailing rate for
insured money market accounts and the passbook or passbooks or other
evidence or indicia of ownership of the Escrow Account shall be retained by
Escrow Agent. All further deposits into, withdrawals from or other
transactions regarding the Escrow Account shall be performed, made and
undertaken solely by Escrow Agent.
(b) Notwithstanding anything to the contrary, in the event
Escrow Agent shall be uncertain as to its responsibilities hereunder, or
shall receive conflicting instructions with respect to the disposition of
the Deposit, the Extension Deposit and/or the Additional Deposit and/or the
Reports Deposit and/or the KRT Note and/or the GP Note, Escrow Agent shall
be entitled to retain the Deposit, the Extension Deposit, the Additional
Deposit (if applicable), the Reports Deposit, the KRT Note and the GP Note
until such time as Escrow Agent receives (i) written instructions signed by
GP and KRT directing Escrow Agent to make disposition of the Deposit, the
Extension Deposit, the Additional Deposit (if applicable), the Reports
Deposit, the KRT Note and the GP Note as directed, and (ii) such other
documentation, including but not limited to a joint release of Escrow
Agent's obligations hereunder, as counsel to Escrow Agent may reasonably
require. Hereinafter the aforesaid documentation is referred to as the
"Direction Letter". Such disposition shall be made within five (5)
business days following receipt by Escrow Agent of the Direction Letter.
(c) KRT shall be entitled to receive all of the interest
accruing on the Deposit, the Extension Default, the Additional Deposit and
the Reports Deposit, except in the event of a default by KRT under this
Agreement, in which event GP shall be entitled to retain such interest.
KRT's employer identification number is 00-0000000.
(d) Except to the extent otherwise provided in the
Contracts, GP shall be entitled to receive all interest on the Initial
Escrow Deposits and the Additional Escrow Deposits held by the escrow agent
under the Contracts.
(e) Escrow Agent undertakes to perform only such duties as
are expressly set forth herein, which duties the parties agree are
ministerial only. KRT acknowledges that Escrow Agent may continue to
represent GP in the transactions contemplated by this Agreement.
(f) Escrow Agent may accept any instructions, directions,
documents or instruments signed or issued by or on behalf of the parties
hereto, if believed by Escrow Agent to have been properly executed.
(g) Escrow Agent shall not be liable for any action taken
by it in good faith and believed by it to be authorized or within the
rights or powers conferred upon it by these instructions, and may consult
with counsel of its own choice and shall have full and complete
authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel,
except that nothing herein contained shall excuse the Escrow Agent from
liability for any act or omission on its part taken or suffered in bad
faith or in willful disregard of these instructions.
(h) Escrow Agent may, at any time and for any or no reason,
resign and be discharged from its duties or obligations hereunder by giving
to the parties hereto notice in writing of such resignation, specifying a
date when such resignation shall take effect. Effective upon such
resignation, Escrow Agent shall turn over the Deposit, the Extension
Deposit, the Additional Deposit (if applicable), the Reports Deposit, the
KRT Note and the GP Note to a successor escrow agent acceptable to the
parties.
(i) The parties hereto hereby jointly and severally
indemnify and hold harmless Escrow Agent from and against any and all
liability, cost, claims, damage and expense which Escrow Agent may incur in
the performance of its functions hereunder, including, without limitation,
attorneys' fees and expenses, except for any act or omission on the part of
Escrow Agent taken or suffered in bad faith or in wilful disregard of this
Escrow Agreement.
(j) Upon the Closing, Escrow Agent shall (1) deliver the
Deposit, the Extension Deposit and the Additional Deposit (other than any
interest accruing thereon) to GP, (2) deliver the interest accruing on the
Deposit, the Extension Deposit and the Additional Deposit to KRT (3) return
the KRT Note to KRT, and (4) return the GP Note to GP. The Reports Deposit
shall be disbursed in accordance with the terms of Section 7 hereof.
(k) In the event the Closing does not occur, KRT may send a
notice to Escrow Agent claiming that the Closing did not occur by reason of
(x) a default by Sellers under the Contracts or by reason of a failure of a
condition precedent to the obligations of GP under the Contracts or by
reason of a failure of a condition precedent to the obligations of KRT
under this Agreement, or (y) a default by GP under the Contracts or under
this Agreement. Any such notice may be accompanied by a request that, in
the case of (x) above, Escrow Agent (A) deliver the Deposit, the Extension
Deposit, the Additional Deposit and the KRT Note to KRT and the GP Note to
GP and (B) disburse the Reports Deposit in accordance with the terms of
Section 7 hereof or that, in the case of (y) above, Escrow Agent deliver
the Deposit, the Extension Deposit, the Additional Deposit, the Reports
Deposit, the KRT Note and the GP Note to KRT.
(l) In the event the Closing does not occur, GP may send a
notice to Escrow Agent claiming that the Closing did not occur by reason of
(x) a default by Sellers under the Contracts or by reason of a failure of a
condition precedent to the obligations of GP under the Contracts or by
reason of a failure of a condition precedent to the obligations of GP under
this Agreement, or (y) a default by KRT under this Agreement. Any such
notice may be accompanied by a request that Escrow Agent disburse the
Reports Deposit in accordance with the terms of Section 7 hereof and, in
the case of (x) above, deliver the Deposit, the Extension Deposit, the
Additional Deposit, the Reports Deposit and the KRT Note to KRT, and the GP
Note to GP, or that, in the case of (y) above, deliver the Deposit, the
Extension Deposit, the Additional Deposit, the KRT Note and the GP Note to
GP.
(m) In the event Escrow Agent shall receive a notice from
KRT pursuant to Section 17(k) hereof or from GP pursuant to Section 17(l)
hereof, Escrow Agent shall promptly send a copy of such notice to the other
party (the "Receiving Party"), and shall follow the instructions set forth
in such notice unless Escrow Agent receives from the Receiving Party on or
prior to the tenth day after delivering such notice to the Receiving Party
a notice indicating that the Receiving Party disputes the instructions set
forth in such notice. In the event Escrow Agent receives such a notice
from the Receiving Party within such period, Escrow Agent shall continue to
hold the Deposit, the Extension Deposit, the Additional Deposit, (if
applicable), the Reports Deposit, the KRT Note and the GP Note until such
time as Escrow Agent has received the Direction Letter.
21. This Agreement and all documents, agreements, understandings
and arrangements relating to this transaction have been executed by the
undersigned in his capacity as an officer or trustee of KRT which has been
formed as a Maryland real estate trust pursuant to a Declaration of Trust
of Kranzco Realty Trust, dated June 17, 1992, as amended and restated, and
not individually, and none of the trustees, officers or shareholders of KRT
shall be bound or have any personal liability hereunder or thereunder.
Each party hereto shall look solely to the assets of KRT for satisfaction
of any liability of KRT in respect of this Agreement and all documents,
agreements, understandings and arrangements relating to this transaction,
and will not seek recourse or commence an action against any of the
trustees, officers or shareholders of KRT or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder.
The foregoing shall also apply to any future documents, agreements,
understandings, arrangements and transactions between the parties hereto.
22. Each party hereto agrees to take such further actions and to
execute such further documents as may be reasonably requested by the other
party in order to more fully effectuate the provisions of this Agreement.
23. Prior to the closing of the transactions contemplated
hereby, GP shall not issue any press release or make any public statement
with respect to this Agreement or any transaction contemplated hereby
without the prior written consent of KRT; provided, however, that GP may,
without the prior written consent of KRT, issue such press release or make
such public statement as may be required by law or as is legally necessary
for securities filings if it has used reasonable efforts to consult with
KRT and to obtain KRT's consent but has been unable to do so in a timely
manner.
24. Notwithstanding anything to the contrary contained herein or
elsewhere, and except as set forth specifically in Section 11(b) hereof, in
the event of a default by GP under any provision of this Agreement, no
corporation, trust, person or other entity affiliated with GP, as a
shareholder, officer, director or agent of GP or otherwise, or any person
who participated in the negotiation or documentation of the transactions
contemplated hereby, shall have any personal liability, financial or
otherwise, in law or in equity, for any performance required herein.
Without limiting the generality of the foregoing, except as set forth in
Section 11(b) hereof, there shall be no personal liability on the part of
Xxxxx X. Xxxxxxxxx, Xxxxxxx X. Mittental, Xxxx Xxxxx, J. Xxxx Xxxxxxxx,
Xxxxx X. Xxxxxxxxx or Xxxx X. Xxxxxx.
25. Notwithstanding anything contained herein to the contrary,
KRT acknowledges, warrants and covenants on behalf of itself and its
successors and assigns that, in the event this Agreement is terminated for
any reason other than the default of GP, KRT shall refrain, for a period of
two (2) years from such termination, from making any contacts or entering
into any negotiations or contracts with Sellers relating to the purchase or
other acquisition of the Properties. KRT acknowledges that any breach of
the foregoing is a material breach of this Agreement and would cause
irreparable damage to GP that would be difficult to ascertain, and as a
result of such breach, GP shall be entitled to the Deposit, the Extension
Deposit and the Additional Deposit, and KRT shall owe GP Two Million and
00/100 Dollars ($2,000,000) as liquidated damages in full settlement of all
claims resulting from such breach.
26. Time shall be of the essence with respect to the obligations
of GP and KRT to close the transactions contemplated hereby and by the
Merger Agreement within the time periods required with respect to the
Closing under the Contracts.
27. If legal action is commenced to enforce any obligation of
either party hereunder or under the KRT Note or the GP Note, the prevailing
party shall be entitled to recover from the non-prevailing party reasonable
attorneys' fees and disbursements sustained in connection with such legal
action and in connection with any post-judgment proceedings commenced to
enforce or collect any judgment obtained in such action.
The provisions of this Section 24 shall survive Closing or any termination
of this Agreement.
28. GP hereby covenants that, so long as this Agreement shall be
in full force and effect, GP shall not effectuate, or attempt to
effectuate, a transaction in the nature of an assignment of the Contracts
to any party other than KRT.
29. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
original, and the execution of separate counterparts by the parties hereto
shall bind the parties hereto as if they had each executed the same
counterpart. The parties hereto may further execute and deliver this
Agreement by facsimile, with original executed counterparts to follow
promptly after delivery thereof by facsimile.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
GP DEVELOPMENT CORPORATION
By: /s/Xxxx Xxxxx
------------------------
Name: Xxxx Xxxxx
Title: Vice President
KRANZCO REALTY TRUST
By: /s/Xxxxxx X. Xxxxxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
Agreed to for purposes of
Section 17 only:
XXXXXX AND GARTEN
PROFESSIONAL ASSOCIATION
By: /s/Xxxxx X. Xxxxxxx
-----------------------
Xxxxx X. Xxxxxxx
Shareholder
Agreed to for purposes of
Section 11(b) only:
/s/Xxxxx X. Xxxxxxxxx
---------------------------
Xxxxx X. Xxxxxxxxx
/s/Xxxx X. Xxxxxx
---------------------------
Xxxx X. Xxxxxx
/s/Xxxx Xxxxx
---------------------------
Xxxx Xxxxx
/s/Xxxxxxx X. Mittental
---------------------------
Xxxxxxx X. Mittental
EXHIBIT A
THE CONTRACTS
1. Purchase and Sale Agreement dated July 25, 1997 among Tower Plaza
Associates, L.P., as seller ("Tower"), ELG, as buyer, and Newmark & Company
Real Estate, Inc., Westside Realty Group, L.L.C. and Parkway Partners,
L.L.C., as brokers, as modified by First Amendment to Purchase and Sale
Agreement dated as of September 30, 1997 between Tower and ELG, as further
modified by letter agreement dated October 28, 1997 between GP and Parkway
Partners, L.L.C.
2. Purchase and Sale Agreement dated July 25, 1997 among West
Stewarts Mill Associates, L.P., as seller ("West Stewarts"), ELG, as buyer,
and Newmark & Company Real Estate, Inc., Westside Realty Group, L.L.C. and
Parkway Partners, L.L.C., as brokers, as modified by First Amendment to
Purchase and Sale Agreement dated as of September 30, 1997 between West
Stewarts and ELG, as further modified by letter agreement dated October 28,
1997 between GP and Parkway Partners, L.L.C.
3. Purchase and Sale Agreement dated July 25, 1997 among NorthPark
Associates, L.P. (Xxxx), as seller ("NorthPark"), ELG, as buyer, and
Newmark & Company Real Estate, Inc., Westside Realty Group, L.L.C. and
Parkway Partners, L.L.C., as brokers, as modified by First Amendment to
Purchase and Sale Agreement dated as of September 30, 1997 between
NorthPark and ELG, as further modified by letter agreement dated October
28, 1997 between GP and Parkway Partners, L.L.C.
4. Purchase and Sale Agreement dated July 25, 1997 among Xxxxxxx
Bridge Partners, L.P., as seller ("Xxxxxxx"), ELG, as buyer, and Newmark &
Company Real Estate, Inc., Westside Realty Group, L.L.C. and Parkway
Partners, L.L.C., as brokers, as modified by First Amendment to Purchase
and Sale Agreement dated as of September 30, 1997 between Xxxxxxx and XXX,
as further modified by letter agreement dated October 28, 1997 between GP
and Parkway Partners, L.L.C.
5. Purchase and Sale Agreement dated July 25, 1997 among Mableton
Village Associates, L.L.C., as seller ("Mableton"), ELG, as buyer, and
Newmark & Company Real Estate, Inc., Westside Realty Group, L.L.C. and
Parkway Partners, L.L.C., as brokers, as modified by First Amendment to
Purchase and Sale Agreement dated as of September 30, 1997 between Mableton
and ELG, as further modified by letter agreement dated October 28, 1997
between GP and Parkway Partners, L.L.C.
EXHIBIT B
PROPERTY INSPECTION REPORTS
